Fresh from news that Indonesia’s largest telecommunications firm, Telekomunikasi Indonesia, is on the verge of buying a 27% stake in 2degrees, Telco Review offers insight into the telco’s Maori shareholder history.
After the Labour government provided Maori, preferential rights to radio frequency spectrum (3G) in 1999, the beginnings of what we now know as 2degrees started to take shape.
With a $5m cash contribution from the Crown, the Hautaki Trust worked with telco figure Simon ‘Tex’ Edwards to establish 2degrees, New Zealand’s third mobile network.
Launched in 2009 after nine years of false starts, the telco is now majority owned by US venture capital firm Trilogy International. During this nine year period the business was called both Econet and New Zealand Communications.
2degrees has so far failed to make a net profit and as such hasn’t been paying a dividend to shareholders including the trust.
More than two years after launching, Hautaki Trust borrowed many millions of dollars from Trilogy International to maintain its stake in the telco, pay operational expenses and help make bank payments. This combined with the lack of dividends from 2degrees has caused cashflow problems for the trust’s commercial arm, Te Huarahi Tika.
As a result, sources claim that Hautaki Trust has been openly trying to sell its 2degrees stake for some time.
With Trilogy International lending the trust money, and the trust unable to make repayments, Hautaki is allegedly been paying its interest bills to Trilogy in shares, slowly watering down its stake in 2degrees as a result. This is evident through Companies Office records.
Also unsubstantiated allegations continue to fly of over-the-top director salaries for members of the trust despite its difficult financial position.